Commercial Real Estate Finance

Archive for the ‘People’ Category

Imagine two office buildings of equal size, quality, and leasable space, sitting right next to each other. As far as anyone is concerned, these properties are identical. Now, imagine their landlord sells both properties–but rakes in far more money for one building than for the other. Why would this happen?

Even if these properties are physically identical, there is one essential feature that counts toward an asset’s value more than anything else: tenants. Maybe–and this isn’t much of a stretch, coming out of the Recession–Building A is fully leased, while Building B is completely vacant? Even if these properties have the same capacity for revenue, the fully leased property is the only one with potential, much less certainty, of future income. It all comes down to which businesses and residents reside–or plan to reside–in a particular property.

A dilapidated shanty in the middle of Siberia could sell for 300/SF–if it had a long-term lease with Google.

Also important is the question of what other businesses are located in the area, since these help determine the financial strength of a potential tenant or buyer. For members of the real estate community–whether investors, developers, brokers, capital advisors, or pretty much anyone else–a property’s tenants and neighbors have an enormous influence in deals and decision-making. Up until this point, however, discovering detailed tenant information usually took a bit of digging.

Aziz Akin, an experienced analyst in Manhattan, believes his product can make tenant research significantly easier. This service, Buzzfile, is an online search platform that locates and identifies companies throughout the United States, providing results according to street address, company, industry, city, number of employees, and other specifics.  Read the rest of this entry »

Today, we’re excited to feature Part One of our video interview with Jane Gol, president of Continental Ventures Realty. She discusses Manhattan’s busy real estate market, its challenges, and future opportunities for investors and developers. (Check in next Sunday for Part Two!).

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Mensch 

Noun, informal. A decent, upright, mature and responsible person. 

Schlemiel 

Noun, slang. An awkward, clumsy, or unlucky person whose endeavors tend to fail; a loser. 

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Mensch of the Week:

Toyo Ito, Architect

Even though the Llenrock Blog is ostensibly about CRE finance, we like to branch out to other sectors and specialties in the real estate world. It’s nice to have a little variety.

One of my favorite topics to explore is architecture, partly because of the fascinating news and profiles I see in this field, party because it makes for prettier pictures.  Discussions about CMBS loans rarely offer interesting visuals, unless you’re really into line graphs.

I’m happy to report today’s Mensch of the Week is a fascinating architect named Toyo Ito. The Korean-born, Japan-based architect recently received the Pritzker Prize–sort of the Nobel Prize in architecture–for his “iconoclastic” building designs. Read the rest of this entry »

Mensch:

Noun, informal. A decent, upright, mature and responsible person.

Schlemiel:

Noun, slang. An awkward, clumsy, or unlucky person whose endeavors tend to fail; a loser.

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Mensch of the Week:

Robert Rubin

Co-chair, Council on Foreign Relations & Former U.S. Treasury Secretary

Earlier this month, Robert Rubin spoke to CNBC about a comment made by Sandy Weill, his former colleague at Citigroup (NYSE: C). Mr. Weill said, in essence, that it would be wise for the U.S. government to split up financial institutions that are “too big to fail.”

Any matter that involves public and private interaction tends to be complex, not to mention controversial. Though many have railed against the “cozy” relationship between government and commercial entities, the interdependence of these two groups doesn’t always mean one side understands the other. Maybe the economic and regulatory problems highlighted by the Great Recession are just as much a product of this lack of understanding as they are of government/Wall Street cronyism?

Luckily, there are people like Robert Rubin, who have a depth of experience on both sides of the public/private divide. Mr. Rubin spent years as an executive with Goldman Sachs and later Citigroup, but also served as the Treasury Secretary during the Clinton years. Such a resume affords him a unique insight into the complex world of financial regulation. Read the rest of this entry »

A new year means the results of last year’s real estate competitions are beginning to trickle in. Of course, the finals for MIT’s annual case competition aren’t until April, and the Philadelphia Real Estate Council’s Student White Paper Competition just wrapped up its submission period. But a high-profile competition on the urban planning side has already announced its winners.

The Philadelphia Center for Architecture recently announced the results of its 2013 Ed Bacon Student Design Competition. This year’s winner is a team from Cornell University (which has a pesky habit of winning these things), with additional jury prizes going to the University of Maryland, University of Nottingham (UK), University of Tennessee, and National University of Singapore. Congratulations to Cornell’s team: Logan Axelson, Caleb Cheng, Katherine Li, Jesse Nicholson, and Travis North!

Since the competition is run by the Philadelphia Center for Architecture, each year’s challenge is, of course, focused on one of Philadelphia’s complex planning opportunities. Previous contests have focused on the I-95 corridor on the east of the city and brownfield reclamation in the city’s Gray’s Ferry area. The 2013 challenge focuses on the transportation infrastructure and neighborhood to the west of the Schuylkill river (between Spring Garden and South Street). Here’s a brief excerpt from the competition’s overview: Read the rest of this entry »

Mensch:

Noun, informal. A decent, upright, mature and responsible person.

Schlemiel:

Noun, slang. An awkward, clumsy, or unlucky person whose endeavors tend to fail; a loser.

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Mensch of the Week:

Robert Sulentic, CBRE

Our Mensch of the Week is Robert Sulentic, whose position at CBRE (NYSE: CBG) was recently expanded from President to President-and-CEO. He’s taking on this role as the replacement for Brett White, who announced his retirement earlier this year. Mr. Sulentic is now the highest executive in the world’s largest commercial real estate services firm. To get a sense of CBRE’s influence in the commercial real estate market, not just in the U.S. but internationally as well, look at a couple of our recent “Top 10 Brokers” lists (here and here). When you tally the firm’s yearly transactions, CBRE’s numbers eclipse those of its competition.

CBRE, one might argue, is one of the most powerful “middlemen” in the world, but there’s far more to the company than landlord/tenant representation. In fact, that’s how Mr. Sulentic found himself at CBRE in the first place. Commercial Property Executive‘s Barbra Murray explains,

Sulentic has been a member of the CBRE family since 2006, when he came aboard as group president with the merging of Trammell Crow Co. and CBRE. He was tasked with overseeing CBRE’s EMEA and Asia Pacific operations and soon after, he became CEO of the Development Services business. His rise at CBRE continued in 2009, when he was named CFO to help guide the company through the real estate market downturn.

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Week in Review for December 8 – 14:

- As tensions mount over U.S. tax policy, the federal deficit, and the potential impact of the fiscal cliff, a number of high-profile executives including David Cote of Honeywell (NYSE: HON) and Lloyd Blankfein of Goldman Sachs (NYSE: GS) announce their support for increased taxes as part of a “reasonable compromise.”

- British retailer Tesco (LON: TSCO) prepares to depart from the U.S. retail market. The company’s portfolio of 199 Fresh & Easy stores, the company’s first venture in the U.S. grocery business, has proven disappointing. Among the challenges Tesco faced were “poor location” choices, the onset of the Great Recession, and a lack of successful merchandising, say analysts.

 - CoStar Group’s Commercial Repeat Sale Indices (CCRSI) shows minimal change in property pricing at the beginning of 2012′s fourth quarter.

- Automotive parts manufacturer Dorman (NASDAQ: DORM) renews its lease of 342,000 SF in Colmar, PA. This industrial/warehouse building, which includes Dorman’s headquarters, is owned by BREP, Inc., says CoStar.

- Cole Credit Property Trust II, a non-traded REIT with 753 single- and multi-tenant properties, explores the possibility of new ownership, a regulatory filing suggests.  Read the rest of this entry »

Dismayed by low yields and volatility in the equity markets, more and more investors are targeting alternative investments, says Matthew Botein of BlackRock (NYSE: BLK). These alternatives include not only hedge funds, but real estate debt and REITs:
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Special interests have seen a great deal of criticism in recent years–and this backlash may intensify as we approach the election–but the fact remains: an industry or group that doesn’t commit great amounts of time and resources (i.e., $) to “making its voice heard” will be drowned out by competing voices. It should be no surprise that the commercial real estate world has joined other industries and special interests on the “dark side”–political lobbying.

Its board of directors includes some of the industry’s bigwigs, with executives from financial giants like Citigroup (NYSE: C), Lincoln Property Company, and CalPERS, as well as publicly traded REITs like Ventas (NYSE: VTR) and Taubman Centers (NYSE: TCO).While industry heavyweights are well represented, the Roundtable emphasizes the inclusiveness of its political goals, and has members from pretty much every CRE sector, as well as non-profits (click below to see the breakdown).

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 Mensch: Noun, informal. A decent, upright, mature and responsible person.

Schlemiel: Noun, slang. An awkward, clumsy, or unlucky person whose endeavors tend to fail; a loser.

Mensches of the Week:

Larry Page & Sergey Brin

Sure, they’ve taken over the Internet, plus everyone’s personal information and search histories, in preparation for their inevitable domination of humanity. But they also give us lots of playful Google Doodles, which everyone agrees are pretty cool and make them worthy of mensch-hood. On top of that, Google (NASDAQ: GOOG) co-founders Larry Page and Sergey Brin are making a sizable contribution to New York City’s emergence as a technology hub.

Back in December, I discussed the city’s competition to plan a research campus on Roosevelt Island. A design submitted jointly by Cornell University and Technion-Israel Institute of Technology beat a number of high-profile competitors, and the two schools have been awarded the space and millions in city funding to bring a world-class technology research campus to Roosevelt Island. Of course, a project of such scope won’t spring up overnight, and this is where the executives from Google come in. Read the rest of this entry »